Germany copes with gas crisis

Sunday, 2022-06-26 15:28:11
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Nord Stream 2 gas pipeline system in Lubmin, Germany. (Photo: Reuters)
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NDO - In the context of falling gas supplies from Russia and increasing gas prices, the German government has declared the “alarm level” of the country’s gas emergency plan. Analysts are concerned about the risk of an economic recession in Europe’s leading economy if there is no longer a gas supply from Moscow and this entails many consequences for neighbouring countries.

Speaking at a press conference in Berlin, German Vice Chancellor and Minister for Economic Affairs and Climate Action Robert Habeck said that the current situation is serious and Germany is “in a gas crisis”.

According to Habeck, the gas supply to Germany has been interrupted and since Russia reduced the amount of gas supplied to Germany through the Nord Stream 1 pipeline, the situation has become serious and this is the reason Berlin needs to activate gas alarm levels.

After Russia carried out a special military operation in Ukraine, Germany developed a plan to deal with the gas crisis with three levels: early warning, alarm and emergency.

At the end of March, Deputy Prime Minister Habeck announced the early warning level (first level) of this plan, which would closely monitor daily gas flows and focus on gas storage.

With the latest announcement over the past week, the German government raised the alarm on gas to level 2, after seeing a high risk of long-term supply shortages. Vice Chancellor Habeck said that the gas shortage is a great burden for people and businesses.

He called on the German people and businesses to save more gas, both now and next winter. According to him, 41 million households in Germany could make a difference with savings of up to 15% on heating costs. Businesses have also reduced their gas usage by 8% and may continue to reduce further.

In addition, the German government has actively prepared new energy storage facilities, enacted legislation and conducted alternative gas procurement. According to Habeck, Germany can still buy enough gas on the market to fill its reserves at present. The German Government’s top priority is to fill gas storage facilities, find alternative suppliers and continue to expand renewable energy.

However, the above actions are not enough to ensure that the German economy is safe in the face of the energy crisis. The Federation of German Industries (BDI) recently warned that Europe’s leading economy will inevitably fall into recession if Russia completely stops supplying gas to Germany. The BDI has also reduced its economic growth forecast from 3.5% (given before the outbreak of the Ukraine conflict) to 1.5% in 2022.

Germany’s declaration of an alarming level in the gas emergency plan is worrying European countries because Germany is the leading economy of the “old continent”. Once this leading economy slows down, the economic growth of countries in the region will also be affected.

German media quoted Belgian Prime Minister Alexander De Crooas saying he was concerned about the energy situation in Germany after the country admitted it may have to cut some economic activities due to the gas shortage. According to De Croo, Germany is currently the only country that has to admit such a serious gas shortage and it could have a knock-on effect on all other European countries.

The German economy has weathered the storm for years and Germany has always led Europe through both financial and migration crises over recent years.

This gas crisis is once again testing the leadership and resilience of the German Government in the face of difficulties. To once again overcome the crisis, Germany is in dire need of the support and consensus of all EU members not only in economic issues but also in financial, foreign policy and defence decisions.